Tuesday, August 29, 2017

Family Responsibility Laws and Long-Term Care

Did you know that over half the states in the U.S. have family responsibility laws which could make you financially obligated for the nursing home bills of your parents?  Filial responsibility laws could also make your children legally responsible if you need to move into a skilled nursing or memory care facility.  Just as shocking to some people, if one of your children cares for you in their home, your other children could be forced to pay your caregiver child part of the cost of your care.

Which States Have Filial Responsibility Laws?

Family responsibility laws cover over half the people in the United States.  Below is a list of states which currently have filial responsibility laws on the books, although the laws may vary slightly from state to state and are unevenly enforced:

Alaska, Arkansas, California, Connecticut, Delaware, Georgia, Idaho, Indiana, Iowa, Kentucky, Louisiana, Maryland, Massachusetts, Mississippi, Montana, Nevada, New Hampshire, New Jersey, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Utah, Vermont, Virginia, and West Virginia.

How to Protect Your Family from Filial Responsibility Laws

Fortunately, there are actions you can take to protect yourself and your family from becoming financially liable for nursing home bills incurred by you or your parents.  The most important thing you can do is to have a plan.  Below is a range of possible options.  You only need to choose one.

1.   Put aside money for your future care.  People who have sufficient savings, cash value in their life insurance, or home equity are usually in good shape to pay for their own long-term care, although they may have to borrow against their insurance or home. As a result, they will not pass on the burden for their care to their children.  For example, if your elderly parents have enough money, insurance, or home equity to pay for their care, you will not be responsible for covering the cost, unless they use up all their assets.  At the same time, if you have also accumulated enough savings, you will protect your children from being liable for your care.

2.  Buy long-term care insurance.  Another option is to buy long-term care insurance which will pay for skilled nursing care, memory care, or an in-home caregiver.  The younger you are when you purchase this insurance, the less expensive it is.  You must be able to pass a physical to get it, so it may be too late for some applicants.

3.  Move into a CCRC.  A CCRC is a Continuing Care Retirement Community.  Typically, a senior citizen sells their home to "buy in" to the CCRC.  In addition, they pay a monthly fee which covers their food, housing and normal care.  If they need extra care as they age, they either pay for the extra care when they need it, or the cost is taken from their original "buy in" fee.  The facility guarantees they will be taken care of for the remainder of their life.  If there is money left over from the "buy in" fee at the end of their life, a portion of it will be returned to the family.  In most cases, you must be able to live semi-independently and not need skilled nursing or memory care when you move into the CCRC.  However, you do not need to be in perfect health.  For example, in most cases you can be undergoing treatment for cancer or other illnesses, as long as you are able to walk on your own and live in your own apartment at the time you move into the facility.  This takes a little advanced planning.

4.  Confirm that you are qualified for Medicaid.  If you do not have equity in a home and very few assets, you may qualify to receive Medicaid, a government program which will cover your long-term care.  However, if using Medicaid is your plan, you should make sure you are eligible and that either you or someone in your family is prepared to complete the application as soon as you are admitted to a skilled nursing or memory care facility.  Medicaid is a common way of handling these expenses.  In fact, Medicaid (called MediCal in California) is the most common payer of nursing home expenses in the state of California, as well as many other states.  If the family does not complete the necessary forms in a timely way, however, the family can still be liable for any expenses incurred until they make sure the paperwork has been properly dealt with. Whoever completes the forms will need access to all your financial information, including tax returns and bank accounts, so they can prove that you are eligible.  There is a catch with using Medicaid ... if the patient has recently gifted too many assets to their heirs, they may not qualify until those assets are first used to cover the nursing home costs.

5.  Choose a family member who can care for you in their home.  This is something you need to decide in advance and everyone in the family should be in agreement about who will care for you, which relatives will relieve your caregiver periodically so they can get a break, and how your expenses will be covered while you stay in your family member's home.  It would be helpful to have a family meeting and write out the plan in advance.  It would also be helpful to have a back-up plan, such as Medicaid, in the event your care becomes too much for a family member to handle.  For example, my sister cares for our mother who has dementia.  Our mother has wandered off a few times and fallen on several occasions.  If it becomes impossible for my sister to keep our mother safe, we have all accepted that she may eventually have to move into a memory care facility.

However you decide to handle the long-term care expenses of your parent or yourself, it is important to have a plan so you do not trigger family responsibility laws and leave some other family member saddled with unexpected expenses.

If you would like an overview of retirement planning, watch for my book Retirement Awareness: 10 Steps to a Comfortable Retirement which will be released in 2018 by Griffin Publishing.

For more information on financial planning, where to live after retirement, Social Security, Medicare, common medical problems and more, use the tabs or pull-down menu at the top of the page to find links to hundreds of additional articles.

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Photo credit:  morguefile.com


"Filial Responsibility: Can the Legal Duty to Support Our Parents be Effectively Enforced?" by Shannon Frank Edelstone, American Bar Association's Family Law Quarterly, 36 Fam. L.Q. 501 (2002)

"Family-Responsibility Laws Could Cost Your Clients" by Jamie Hopkins, Barron's, April 24, 2017

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